To price any item or service, you need some idea of what the
competition is charging. Otherwise, your price might be so high
that no one will buy, or so low you can't make a profit. Why
not just sit down with your competitors and agree on the same nice,
fat price?

Do that, and you run afoul of the Sherman Anti-trust Act, which
has prohibited price fixing in the United States since 1890.
Designed to encourage healthy competition, the law forbids
companies from entering "contracts, combinations or
conspiracies" in restraint of trade. If customers or
competitors suspect price fixing, they can file a complaint with
the FTC. Violating the Sherman Anti-trust Act is a felony, subject
to fines of up to $10 million or jail terms of up to three years.
And injured customers or competitors can sue for up to three times
their actual damages.

It's OK to engage in parallel pricing by reading ads or
checking out prices. That's why gas stations in any town
usually all charge about the same price. But station owners have
gotten in trouble for notifying each other when to raise
prices.

Manufacturers may also insist that their dealers sell for a
particular price--as long as it's a unilateral requirement and
the manufacturer doesn't debate the policy with its
dealers.

So don't even discuss prices with competitors, and don't
cut any deals.

Jane Easter Bahls is a writer in Rock Island, Illinois,
specializing in business and legal topics.